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Small business, often plagued with a shortage of
start-up funds, must use
exceptional strategies to get the business running without draining much needed
capital. Most especially if competing head-on with a big company is imminent.
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Unless millions of dollars is readily available to launch the business, the
only chance at
winning against a big competitor is to focus on
niche possibilities.
Niche entails offering unique products or services to a few
concentrated markets. It is a less risky strategy and provides the best
opportunities for small businesses throughout any marketplace.
It is happening everywhere: small companies are folding up when the big guys
start moving into their territories and flexing its muscles. Remember Meg Ryan
and Tom Hank's sappy film, "You've Got Mail?" Meg's character owns a
small bookstore that has been in their neighborhood since, well, time
immemorial. Until Tom's mammoth bookstore moves into the street, and forced Meg
to close her business.
Niche marketing is the best strategy your small business can use when a large
business moves into your market and territory. For example, let us say, you own
an accounting service and a national accounting and auditing chain moves into
your area. You may be better off changing your entire strategy and focusing on
serving small businesses.
Your business stands a greater chance at success if you offer something
different to a small group or segment of consumers that have unmet preferences.
You must identify the target market and meet their needs with your product or
service.
Instead of selling household decor, sell wall frames. Instead of selling
spices and condiments, sell hot sauce. Instead of selling baby clothes, you
focus on offering the best quality, widest range of selection and most
affordable clothes for baby boys. When people think of buying clothes for their
baby boys, they would first come to you.
The key is to focus, focus and focus until you become irresistible to your
buyers. You stand a better chance at success, if you concentrate your entire
business on one or few specific niches.
The drawback of niche marketing, though, is that you may have a smaller
volume, which often results to higher operating costs. Nonetheless, the lessened
competitions will more than make up for it.
If the market niche or niches you are considering have very small markets,
you may want to retain some products and services that appeal to a wider range
of customers but have exceptional product depth in a few niche areas.
Tony
Roeder applied this strategy for RedWagons.com (http://www.redwagons.com),
the main distributor of Red Flyer toy wagons on the Internet. He knew that there
is no way he can compete with the likes of Amazon.com and eToys.com, which all
carry Red Flyer wagons in their huge toy inventory. Instead, he decided to focus
on Red Flyer wagons and offer the entire product line. While his big competitors
carry only 3-4 models, he has the entire collection to please any avid Red Flyer
wagon enthusiasts. The strategy paid off, and he now makes more than a million
dollar a year in his online business. (For
our story on Tony Roeder, click
here)
To help you identify and meet the needs of your niche market, below are some
things you need to consider:
1. Aim
for a specific target and allocate resources just for that target.
When looking at a business to start, look for a highly targeted market. Cover
only a small, but profitable, base of customers. You cannot be everything to all
customers. Yet make sure that you have the best product or are the best service
provider in that narrow market.
If you are looking at the home décor market in North America, think of an
area that is currently not being serviced well. Maybe you can provide the market
with rare, one-of-a-kind decorative items from far-flung countries like
Uzbekistan, the Philippines, Thailand, etc -- items that are not commonly found
in shops like Pier 1 Imports or World Trade.
2. Talk
to potential customers one at a time.
As soon as you have narrowed your target market, find a person that you think
would be your ideal customer. Find a solution for that customer and then
determine how others may be interested in that solution.
For exotic home decors, your customer probably is middle-to-upper class, who
has traveled a lot and developed a taste for other cultures. Ask your potential
customer what kind of products he or she would like to see; or if the customer
would be interested in the type of product you are considering. Perhaps the
customer may want one-of-a-kind framed art or conversational centerpieces that
will not be in his or her neighbor's house.
3. Do
some market research to verify your findings.
Information is the key to a successful marketing strategy. Before launching your
product, get hold of as much information as you can about your potential
customers, costs of production, and competitors' products.
Market research need not be expensive. You can do some informal talking with
potential customers. You can browse through home decorating magazines to find
out about other suppliers in the business. You can run a query on the search
engines to determine how many other dot-coms serve the same market.
4. Find
out the kind of product characteristics that your potential customers value.
Do they want high quality, low price, convenience features, reliability or any
other product characteristics you are interested in learning about. If you are
selling exotic home décor products, for example, what influences a customer: is
it the price range, the history or context of a piece, texture, colors, design
or functionality?
Keep in mind that no industry or type of business is an immediate gold mine.
It depends on what is not being adequately supplied or services in a particular
area. To succeed in your business, your goal is to identify a particular segment
where you can fulfill an unsatisfied need.
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